Mothers lose up to €200k in pensions

Staying at home for four to five years to look after new born children can cost a mother up to €200,000 in pension contributions.

A recent study by IFG Corporate Pensions found that women fared even worse than was previously assumed when real-life comparison models were run. The study aimed to look at the effect of that absence from the workforce on a typical pension fund.

The results revealed that a mother who chooses to stay at home for five years from 35 to 40 would end up with a pension fund worth €194,316 less than if she had uninterrupted service, when she retires at age 68. That calculation is based on an annual salary of €50,000.

Pensions adviser with IFG Corporate Pensions, Samantha McConnell, said: “There are a variety of factors which can hinder growth of a women’s pension fund and therefore, need to be considered when deciding on contribution rates and other pension fund choices. Career interruption is one such factor, as many women take career breaks when their children are young, with the period out of the workforce typically varying from 5 to 15 years. This will have a huge effect on the amount that they and their employer contribute to their pension upon returning to the workforce.”

Ms McConnell said in the long term women actually need a larger pension fund than men as their life expectancy is on average higher, but a fragmented career path can lead to the opposite happening.